European investors breathe a sigh of relief at the prospect of prudent rate hikes by the US Federal Reserve.

They were also encouraged by the strong corporate balance sheets of US retailers.

Dax and EuroStoxx50 each rose by more than one and a half percent on Thursday to 14,231.29 and 3747.21 points respectively.

The US blue chip index Dow Jones advanced by a similar amount.

The minutes of the most recent Fed meeting signaled further rate hikes of half a percentage point each in the coming months.

"Investors seem relieved that the Fed hasn't hinted at more aggressive rate hikes even as inflation remains elevated," said Stuart Cole, chief economist at brokerage firm Equiti Capital.

In addition, market traders read from the so-called Minutes that at a certain point the Fed could interrupt its cycle of rate hikes in order to assess its effect.

The most likely scenario is that monetary policy will subsequently be tightened more cautiously, predicted Paul Donovan, chief economist at UBS Bank Asset Management.

In recent months, experts have repeatedly warned that sustained rate hikes by the Fed could plunge the world's largest economy into recession.

Retail stocks were also in demand after Macy's provided an upbeat outlook.

The department store chain's earnings in the past quarter exceeded expectations at $1.08 per share, praised analyst Stephanie Wissink from the investment bank Jefferies.

The same applies to the increased full-year target of $4.53 to $4.95 per share.

Macy stocks rose nearly 17 percent on Wall Street as a result.

In their slipstream, the European retail index advanced almost five percent.